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equity

is a chameleon-hued word whose senses have never before been adequately broken down. The primary dichotomy is between sense 1, the popular sense, and sense 4, the lawyer's usual sense. When, under sense 4, lawyers contrast law with equity, they are contrasting the common law with equity; the reader or listener must remember that equity is law. The word has more than a dozen senses, including subsenses:

1.a. In ordinary language, the quality of being equal or fair; fairness, impartiality; evenhanded dealing—e.g.:

b. What is fair and right in a given instance; something that is fair and right—e.g.:

“The essence of equity is the power to do equity. It is a blend of what is fair and what is just.”

In re Gloria Mfg. Corp., 65 B.R. 341, 347 (E.D. Va. 1985).

c. Equal or impartial treatment of parties with conflicting claims—e.g.:

“[Equity de]notes equal and impartial justice as between two persons whose rights or claims are in conflict.”

Demers v. Gerety, 595 P.2d 387, 395–96 (N.M. Ct. App. 1978).

2. The body of principles constituting what is fair and right; natural law—e.g.:

“The term equity may also be used in a wider sense to cover the whole of the field of natural justice, i.e., good conscience.”

Cenydd I. Howells, Equity in a Nutshell 1 (1966).

3.a. The recourse to principles of justice to correct or supplement the law as applied to particular circumstances—e.g.:

“The qualities of mercy and practicality have made equity the instrument for nice adjustment and reconciliation between the public interest and private needs as well as between competing private claims.”

Hecht Co. v. Bowles, 321 U.S. 321, 329–30 (1944) (per Douglas, J.).

b. The construing of a law according to its reason and spirit—e.g.:

“‘Equitie’ is a construction made by the judges that cases out of the letter of a statute, yet being within the same mischief or cause of the making of the same, shall be within the same remedy that the statute provideth.”

Coke, Institutes, bk. 1, 24b (1628).

4.a. The system of law or body of principles originating in the English Court of Chancery and superseding the common and statute law (together called “law” in the narrower sense) when the two conflict—e.g.:

“Equity [is] in essence, a system of doctrines and procedures which developed side by side with the common law and statute law.”

L.B. Curzon, Equity 4 (1967).

b. Any system of law or body of principles analogous to Anglo-American equity, such as the praetorian law of the Romans—e.g.:

“Equity … meaning … any body of rules existing by the side of the original civil law, founded on distinct principles and claiming incidentally to supersede the civil law in virtue of a superior sanctity inherent in those principles.”

Henry S. Maine, Ancient Law 28 (1870).

5.a. An equitable right or interest, i.e., one recognizable by a court of equity. Often pl. E.g.:

“Often, however, the term ‘balance of equities’ is used to denote only a balancing of private and public interests.”

10.Civ. law. Where positive law is absent or ambiguous, the method of deciding cases by natural law or the inferred intent of the legislature—e.g.:

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“Equity in the sense that writers in Continental Europe and Latin and Scandinavian countries use it in observing that ideas of equity are the basis of law and are consequently supplementary law.”

Vilhelm Lundstedt, 25 Tul. L. Rev. 59, 59 (1950).

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“The equity of the statute … seems to be a continental notion…. When the courts spoke of the equity of a statute they meant only that adjustment of detail which is necessary when applying a general rule to a specific case.”

Theodore F.T. Plucknett, A Concise History of the Common Law 334–35 (5th ed. 1956).

11. The right to decide matters in equity; equity jurisdiction; equitable power—e.g.:

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“[Equity] describes the power belonging to the judge—a power which must … be exercised according to his own standard of right.”

John N. Pomeroy, Equity Jurisprudence § 45, at 46 (1881).

12.a. The amount by which the value of a property or an interest in property exceeds secured claims or liens—e.g.:

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“‘[E]quity’ … is the value, above all secured claims against the property, that can be realized from the sale of the property for the benefit of the unsecured creditors.”

In re Mellor, 734 F.2d 1396, 1400 n.2 (9th Cir. 1984).

b. In accounting, the paid-in capital plus retained earnings.

13. A share in a public company quoted on the stock exchange. E.g.:

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“On the other hand, investment in shares of public companies quoted on the Stock Exchange (‘equities’) introduced the risk of dependence upon the fortunes of the company selected … Investment in equities involved risk.”

William Geldart, Introduction to English Law 86 (D.C.M. Yardley ed., 9th ed. 1984).

The term is used in several phrases. A countervailing equity is an equitable right or interest that clashes with another. A latent equity is an equitable claim that has been concealed from one or more interested parties. (The phrase secret equity is synonymous with latent equity.) A natural equity is that which a conscientious person would consider fair or just in the absence of legal guidance. A perfect equity is the interest that a buyer of real estate has after fulfilling all obligations in the purchase, but before receiving the deed. See chancery.